While the demand for mortgage loans to purchase a new home has declined following the expiration of the home buyer tax credit, mortgage applications overall, increased last week as home owners looked to refinance. Mortgage rates have reached their lowest levels since March and many homeowners are looking to refinance their mortgage loans. While falling home prices have reduced the popularity of refinancing to tap into home equity, low mortgage rates have drawn the attention of borrowers looking to reduce their interest payments.
The Mortgage Bankers Association reported an increase in the number of applications for mortgage loans. The first week of May saw just under a 4 percent jump in applications from the previous week. With U.S. fixed rate mortgages hovering close to 5 percent, many homeowners jumped at the opportunity to refinance into lower mortgage rates. And with home prices starting to stabilize, the housing market is beginning to return to business as usual.
In the past few years homeowners have seen tremendous volatility in the housing market, including some of largest declines in home prices in recent memory. Falling home prices have wiped out an unprecedented amount of U.S. homeowner’s equity, shaking up the mortgage business. With home prices showing more stability, borrowers and lenders can once again be confident that once a home is refinanced its value will most likely not fall below the mortgage balance. Some borrowers have even chosen to do cash-in refinances, putting more equity into their home to qualify for lower interest rates.
Mortgage Rates Remain Incredibly Low.
Despite the Federal Reserve ending it mortgage purchasing program, mortgage rates remain low. The Mortgage Banker Association reported that they were as low as 4.96 percent for the first week of May. While above the 4.76 percent they were this time last year, the sub 5 percent rates are still historically low. Many homeowners have been waiting for rates to once again dip down and as the trend of increased mortgage loan applications indicates they are swooping in to take advantage.
In some lower price ranges, because values have nudged up over the last year, some homeowners who couldn’t refinance a year or two ago, now can – at historically low fixed rates! Look into it with your favorite loan person – I can recommend a couple of good ones.